Viacom v. YouTube ruling is a bummer for Google and the UGC community

The new appellate decision in Viacom v. YouTube looks like a loss for Google …

After five years in the courts, the Viacom International, Inc., v. YouTube, Inc. litigation has finally produced an appellate opinion. The result is a loss for Google/YouTube and the user-generated content (UGC) community generally. While the court largely agrees with many of YouTube's contentions (and the ruling of the lower court), it nevertheless revives the litigation, ensuring that Google will spend millions of dollars more over the coming months and years.

Furthermore, the opinion identifies at least four "holes" in 512(c) coverage that future plaintiffs will surely attempt to exploit: smoking-gun internal e-mails, willful blindness, right and ability to control, and content syndication. This ensures that other UGC websites will spend a lot of money upfront to try to shut down those holes and spend even more money in litigation to demonstrate that it avoided those holes. So, on balance, I'm characterizing this opinion as a loss for the UGC community because this ruling increases the industry's costs even if the substantive contours of 512 don't change.

Given that the Second Circuit expressly disagrees with the Ninth Circuit's UMG v. Shelter Capital ruling on the right and ability to control issue, I expect future 512 cases will be brought in the Second Circuit, not the Ninth Circuit. I'm not sure if this conflict is strong enough to get the case to the Supreme Court if Google chose to try.

Most importantly, this opinion exposes a structural deficiency of the 512(c) safe harbor. The statute's simply too long and detailed. If a defendant fails to satisfy each and every element, the safe harbor is lost completely. This is reminiscent of military strategy and information security: the defense has to work equally well across its entire border, while the adversary can concentrate its attack and only has to succeed on one point of attack to win. The same is true with a 512(c) defense.

So, it doesn't matter that YouTube won most of the points of contention. If any single point of contention fails, YouTube's 512(c) defense fails. As I've insisted before, this provides a good lesson for drafters of safe harbors and immunities. To work effectively, the safe harbors/immunities must be pithy and categorical, or else they create too many potential points of failure.

The whole lawsuit is a big waste for all concerned, and the fact the parties can't settle this case after five years of costly trench warfare continues to baffle me.

Even though Viacom won this ruling, I still don't understand how Viacom is making progress toward any strategic objective that matters to it. Viacom long ago conceded that it didn't object to YouTube's practices after 2008 (after it got access to Content ID). Indeed, Viacom gets upset with YouTube when it removes Viacom's posts made for marketing purposes. And Viacom just expanded its licensing arrangements with YouTube. At this point, Viacom is very clear that it doesn't want YouTube to go away, nor does it want any structural changes to YouTube's current practices.

So what the hell is this fight about? Viacom might still look at this lawsuit for its cash value, but it's hard to be sympathetic towards that or see that as a big strategic objective. Viacom might be looking at this case to establish favorable precedent, but it picked a well-funded and determined defendant to make the point. The Second Circuit ruling—though opening the door for copyright plaintiffs seeking to disqualify 512(c) defenses—doesn't contain a big broad pronouncement that would constitute a strategic win for Viacom. The whole lawsuit is a big waste for all concerned, and the fact the parties can't settle this case after five years of costly trench warfare continues to baffle me.

Analysis of the court's discussion

512(c)'s Applicability to Direct and Secondary Infringement

One of the most important rulings of the court comes in an off-hand remark with minimal citation support on page 33: "The District Court correctly determined that a finding of safe harbor application necessarily protects a defendant from all affirmative claims for monetary relief." This is one of the most significant questions in 512(c) jurisprudence: does 512(c) cover only direct infringement, or both direct and secondary infringement? Most courts have assumed the latter without ever saying so, but here the court (echoing, but curiously not citing, the Shelter Capital case) explicitly says 512(c) applies to all flavors of infringement. This makes the safe harbor potentially dispositive to the case—if YouTube gets it, Viacom loses any claim to money damages and, at best, can only get a meaningless limited injunction.

Knowledge of infringing activity

The opinion defines three types of service provider knowledge about infringement that might disqualify the service provider from 512(c):

1) Actual knowledge of specific acts of infringement: The court calls this a subjective knowledge standard.

2) "Red flags" knowledge of specific acts of infringement: The court calls this an objective knowledge standard. I've long argued that the "red flags" standard has evaporated in practice because, objectively, it's impossible for anyone other than the content owner to look at a specific item of content and determine if it's legitimately posted or not. In fact, even content owners can't figure this out for themselves. Viacom itself repeatedly mistakenly identified which items of its own content were properly or illicitly posted to YouTube. If the content owner can't make that determination, I'll argue that objectively no one else could do so either.

3) Willful blindness towards specific acts of infringement: Because of the nature of willful blindness, by definition it occurs in situations where the service provider otherwise doesn't have subjective or objective knowledge of the infringing activity. Unfortunately, the court doesn't say what service provider activities would demonstrate willful blindness, and many of us are scratching our heads wondering how willful blindness can occur when the service provider lacks actual or red flags knowledge. Combined with the Tiffany v. eBay contributory trademark ruling, it shows the Second Circuit is obsessed with willful blindness (though it didn't define willful blindness there either—gee, thanks). The Ninth Circuit had a brief and oblique reference to willful blindness in the Shelter Capital opinion, but my guess is that plaintiffs will like the Second Circuit's express discussion about willful blindness even better than they liked the Ninth Circuit's casual reference.

The court identifies three pieces of evidence that YouTube may have had disqualifying knowledge. First are the e-mails from Patrick Walker asking the team to look for and remove Football League clips. The second is an e-mail from Jawed Karim indicating that there were Viacom clips on the site that may have been "blatantly illegal." Finally, there is evidence of an e-mail exchange between Chad Hurley and Steve Chen debating whether to remove clips now or later.

The court expressly says that this evidence may not be enough for Viacom to show disqualifying knowledge (see FN9), but it is enough to get to a jury.

More generally, these e-mails remind us that YouTube was an unsophisticated start-up in its early days. They didn't have legal counsel reviewing these e-mails or answering its questions about clip removals. Most UGC start-ups now know that these conversations shouldn't be taking place over e-mail. There should be a tightly enforced e-mail retention policy, and active legal counsel is essential from day one. But the modern protocol also means that launching defensible new UGC start-ups is much more expensive.

This is especially true for UGC start-ups trying to avoid the willful blindness doctrine. I criticized the Tiffany v. eBay opinion for endorsing eBay's very expensive anti-infringement infrastructure and implicitly requiring start-ups to maintain a similarly expensive infrastructure. This opinion may have the same adverse economic consequences for other UGC start-ups trying to minimize allegations of willful blindness in the copyright context.

Because the ruling creates more ways for plaintiffs to get to a jury in 512 cases, this ruling also means 512 litigation—even if the defendant succeeds—is going to be more expensive. The needle-in-haystack hunt for smoking gun e-mails means both parties will spend a lot on discovery (a point I complained about in the Shelter Capital case, too). Furthermore, with respect to willful blindness, unless courts aggressively police plaintiffs' allegations, it seems like plaintiffs can use a willful blindness allegation to defeat a 12(b)(6) dismissal motion. If they can find any colorable evidence, plaintiffs can use that to defeat summary judgment and force jury trials in many future 512(c) cases.

Right and ability to control

The court blazes its own trail on what constitutes a service provider's disqualifying "right and ability to control" infringing activity. It disagrees with YouTube and both the lower court and the Ninth Circuit's Shelter Capital case. All of these held that a service provider's right and ability to control only applied when the service provider had specific knowledge of the infringing activity. But the Second Circuit also disagrees with Viacom's proposition that "right and ability to control" imports its meaning from the common law vicarious infringement test. The court rightly recognizes that would render the statute internally contradictory.

The court agrees with no one. Given that it rejected everyone else's definitions, we might expect the court to carefully lay out what it thinks the phrase means. Sadly, no. The opinion doesn't provide an express definition of what qualifies as the "right and ability to control," instead sending that issue back to the district court to figure out both the standard and whether YouTube met it. The clearest clue the court provides about the standard is it "involve[s] a service provider exerting substantial influence on the activities of users, without necessarily—or even frequently—acquiring knowledge of specific infringing activity." I have no idea what that means, other than it's open season for plaintiff fiestas.

My private reply: "That's not how the plaintiffs will put it! They will argue top X lists and exhortations to post constitute "substantial influence""

Stored at a user's direction

The court rejects several of Viacom's arguments that YouTube's automated handling of user-supplied videos wasn't stored at the user's direction, including YouTube's transcoding and playback functions as well as its display of thumbnails in a "related videos" module. However, the court leaves open the possibility that YouTube's "syndication" of user videos didn't qualify for 512(c). Specifically, YouTube licensed 2,000 user videos to Verizon Wireless. It's unclear if any Viacom videos were included. That fact question goes to trial. If no Viacom videos were included, Viacom won't get any benefit from this exception. However, the ruling leaves open future fights over what constitutes "syndication" as a way of bypassing 512(c). More plaintiff fiestas.

42 Reader Comments

I think Eric's reaction is a bit chicken little. EFF and Mark Lemley seem to agree with Sherwin that it's a pretty good decision for UGC generally. Some specifics might be bad for the facts of pre-Google YouTube but that's hardly a policy concern. The decision is very clear and its analysis of the legal points is sound; I would only quibble with the existence of willful blindness (I think the DMCA abrogates that common law test). I don't see how to precisely resolve the right and ability to control issue either. Also YouTube's syndication involved manual selection, hardly a fiesta-level issue.

C'mon, this is a known basic style guide stuff. The first use of an acronym in an article should be spelled out in full, with the abbreviation written after it in parentheses.

While this is minor, I agree. It took me a bit to put the acronym into context. Also, this reads as an opinion piece to me more than a news article. Not to ping, I read the whole thing and enjoyed the information conveyed, but I got that impression.

That said, thanks for taking the time to explain the details to us lay people. Good article.

I wish I could find it, but I remember someone looked at national laws that have been passed over time, and they're generally getting larger, more complex, and more detailed.

I think this is an illustration of why this is a bad thing. As you address more and more specifics, you open more potential loopholes.

Lawmakers needs to keep the KISS principal in mind. If they hadn't tried to define precisely what makes a safe harbor, but rather provided a minimal definition, this sort of thing would probably actually be clearer.

I think Eric's reaction is a bit chicken little. EFF and Mark Lemley seem to agree with Sherwin that it's a pretty good decision for UGC generally. Some specifics might be bad for the facts of pre-Google YouTube but that's hardly a policy concern. The decision is very clear and its analysis of the legal points is sound; I would only quibble with the existence of willful blindness (I think the DMCA abrogates that common law test). I don't see how to precisely resolve the right and ability to control issue either. Also YouTube's syndication involved manual selection, hardly a fiesta-level issue.

I think Eric's reaction is largely a condemnation of the sheer amount of bullshit UGC creates because of how poorly the DMCA was drafted rather than a doom and gloom about this specific ruling. That the contours of a 512(c) defense haven't really changed is a good thing for existing services, as the EFF and Mark Lemley point out, but that doesn't mean that meeting the precise standards for a 512(c) defense isn't much more expensive than it should be over issues service providers should never have been liable for in the first place. He's right, there are way too many potential points of failure and finding and plugging them all costs money. Maybe not so much that everyone in the UGC business is bankrupt but certainly enough to create a totally unnecessary and destructive barrier to entry in the market.

I think Eric's reaction is a bit chicken little. EFF and Mark Lemley seem to agree with Sherwin that it's a pretty good decision for UGC generally. Some specifics might be bad for the facts of pre-Google YouTube but that's hardly a policy concern. The decision is very clear and its analysis of the legal points is sound; I would only quibble with the existence of willful blindness (I think the DMCA abrogates that common law test). I don't see how to precisely resolve the right and ability to control issue either. Also YouTube's syndication involved manual selection, hardly a fiesta-level issue.

I think Eric's reaction is largely a condemnation of the sheer amount of bullshit UGC creates because of how poorly the DMCA was drafted rather than a doom and gloom about this specific ruling. That the contours of a 512(c) defense haven't really changed is a good thing for existing services, as the EFF and Mark Lemley point out, but that doesn't mean that meeting the precise standards for a 512(c) defense isn't much more expensive than it should be over issues service providers should never have been liable for in the first place. He's right, there are way too many potential points of failure and finding and plugging them all costs money. Maybe not so much that everyone in the UGC business is bankrupt but certainly enough to create a totally unnecessary and destructive barrier to entry in the market.

Yeah, but he says the *ruling* is a bummer. The ruling is really good. (CDT now has a post up echoing Public Knowledge and EFF).

The statute stinks--pretty much everyone thinks that, even people on the other side. But frankly, despite my criticism of some aspects of it, I think this decision did a lot more than I ever hoped to clarify specific points of law--in particular, the relationship of common law vicarious liability to right & ability to control, and what the hell "red flags" mean.

People yelling about "UGC." That's a lawyerism, and since this piece was initially on Eric's personal blog totally appropriate, given his audience. Maybe Ars should have edited it, but yell at Ars about that.

C'mon, this is a known basic style guide stuff. The first use of an acronym in an article should be spelled out in full, with the abbreviation written after it in parentheses.

ObTopic, though, I agree with his opinion on the ruling.

I gave up reading the article because of this. It's one of Ars' major reporting flaws, they don't define terms/acronyms or provide links to sites relying instead on comments to solve the problem. Seriously this is basic high school reporting, get an editor please!

++horrible writing. Defining an acrynoym before using it is writing 101 -- c'mon.

Furthermore, at no point is 501(c) defined. It's bandied about like everyone should know what you're talking about and even though I read most articles on Ars about copyright issues, I have no fucking idea what 501(c) is/means.

C'mon, this is a known basic style guide stuff. The first use of an acronym in an article should be spelled out in full, with the abbreviation written after it in parentheses.

ObTopic, though, I agree with his opinion on the ruling.

Thanks for the help. Do Ars authors read the comments on the stories they write? I would think they would want to monitor comments frequently for the first couple hours after a story is posted so they could fix any goofs/gaffs that the readers find. How long before Mr. Goldman fixes this omission?

When I saw the title I was confused, but once I saw that it was about youtube I figured out the acronym. Of course acronyms should be defined on first use, but was it really that hard to figure it out from the context?

Besides LegalSpeak there's also CorpSpeak: "Viacom might still look at this lawsuit for its cash value" just means "they want money".

The article itself is interesting though; it shows how providers are being held responsible regardless of the 'safe harbor' provisions. Even if you, as a provider, know something is infringing, do you also know the copyright owner is objecting to it? Might they not know, but turn a blind eye, and enjoy the exposure it brings?

Furthermore, at no point is 501(c) defined. It's bandied about like everyone should know

Close.512(c) is a section of the United States Code (aka federal law) about copyrights, better known among geeks as DMCA.501(c) is a different section about non-profit organizations.

Presumably Goodman aimed his writing at IP law students (where IP != instructor pilot, internet protocol, or image processing, in particular) who already know the argot, rather than a general technophile audience.

Watch your step, Ars, or the Union of Galactic Consorts will 86 you. They fight for the users!

This whole issue is one of the reasons I find it so strange that many around here can't talk about Google without frothing at the mouth about them being "evil". I know of no other company, surely not MS or Apple, that is pushing back on the content producers and their serious desire to be able to control everything regarding content. Only Google is using resources to limit the content producers rights to swing an epic mallet of hurt against users.

While this dos not make them "good" or "noble" in my book due to it being more about business than fighting the good fight, at least their business interests from time to time help individuals who want to work with content.

In Goldman's original post on his blog, he didn't bother to define UGC, and our editors failed to do that when we edited the version posted here. For the record, it's User-Generated Content. It is now spelled out in the first paragraph and it should have been there since publication.

This is the most annoying article yet on Ars. I started reading, had to skip ahead to see if "UGC" was clarified, got annoyed and gave the fuck up.

Really, UGC? I have never seen that as an initialism. Anywhere.

Apparently it is. At least according to Wikipedia - which was the first result I found from searching for UGC on Google. Probably took less time to open a new tab and do the search than it took to skim the article.

This is what happens when we let courtrooms make decisions on subjects they are ill prepared for. I have yet to read about a judge or a jury that is technologically savvy enough to make fair decisions, (and I'm not talking about judges knowing how to use a computer).Most courtrooms/judges seem not to understand anything that occurs on this new frontier called Internet; this is new land where new laws have to be created or old ones have to be rewritten, but whoever is chosen to either create or rewrite these laws has to be a master of technology and how it truly affects our everyday lives.No one involved in these issues seems to understand this, they continuously apply old laws to new problems. Problems that did not exist before in their present form.When it comes to anything technology related we have a system full of archaic laws that are obsolete, and judges keep trying to apply these laws to the problems at hand.We need a technology savvy Government that knows what they're doing when it comes to technology issues. We need Representatives, Senators, our President, and anything in between in all branches of the government to understand this new way of life and how it works.

This is what happens when we let courtrooms make decisions on subjects they are ill prepared for. I have yet to read about a judge or a jury that is technologically savvy enough to make fair decisions, (and I'm not talking about judges knowing how to use a computer).Most courtrooms/judges seem not to understand anything that occurs on this new frontier called Internet; this is new land where new laws have to be created or old ones have to be rewritten, but whoever is chosen to either create or rewrite these laws has to be a master of technology and how it truly affects our everyday lives.No one involved in these issues seems to understand this, they continuously apply old laws to new problems. Problems that did not exist before in their present form.When it comes to anything technology related we have a system full of archaic laws that are obsolete, and judges keep trying to apply these laws to the problems at hand.We need a technology savvy Government that knows what they're doing when it comes to technology issues. We need Representatives, Senators, our President, and anything in between in all branches of the government to understand this new way of life and how it works.

This will never happen as long as most law-makers are lawyers. Lawyers have a vested interest in crafting obtuse and complex legislation because it creates more work (and therefore prestige and money) for them and their colleagues in the legal profession. Until more people from a non-legal background run for public office (and win elections), we'll only see laws become ever more convoluted and vague.

In Goldman's original post on his blog, he didn't bother to define UGC, and our editors failed to do that when we edited the version posted here. For the record, it's User-Generated Content. It is now spelled out in the first paragraph and it should have been there since publication.

In Goldman's original post on his blog, he didn't bother to define UGC, and our editors failed to do that when we edited the version posted here. For the record, it's User-Generated Content. It is now spelled out in the first paragraph and it should have been there since publication.

Thanks to those who pointed this out.

I enjoy Goldman's analysis on these things, as it gets into much more detail. He tends to jump straight into the legal details without any background information though, so any hand-holding that the editors can provide is appreciated. Having his story act as a followup to simpler coverage helps a lot (as was done in this case, but not previous stories). You may want to have an editors paragraph at the beginning (in italics like I sometime's see) putting the story into context and make it even more clear that this is a detailed analysis of an earlier story, in case readers missed that earlier story.

Viacom is a rich ,greedy, corrupt and stupid company. Just look at the way their top executives talk in emails. I hope other networks become more successful. So we can be rid of them. (Hope they go under)

Ok. Let's say Viacom is right and Google didn't remove the videos when asked. All the views on the videos from the time the videos were suppose to be removed till they were taken down = $1 dollar for Google to pay Viacom. Google, write them a check for roughly $100 million (I have no idea how many views there were) and call it a day.

Ok. Let's say Viacom is right and Google didn't remove the videos when asked. All the views on the videos from the time the videos were suppose to be removed till they were taken down = $1 dollar for Google to pay Viacom. Google, write them a check for roughly $100 million (I have no idea how many views there were) and call it a day.

they would probably rather spend more then that defending themselves from having to do it... lulz